Govt revises growth forecast

March 12, 2009

, NAIROBI, Kenya, Mar 12 -The government has revised its Gross Domestic Product projections to three percent from the 4.5 percent it had announced about two weeks ago.

Finance Minister Uhuru Kenyatta says the revision is due to increased negative impact of the on-going global economic crisis on key sectors.

“The on-going recession in advanced countries will reduce the demand on our exports including tea, horticulture and coffee in 2009, if protracted in the medium term. As such earnings from these key commodities as well as those from tourism, remittance and capital flows are expected to decline,” Mr Kenyatta said.

The Finance Minister reassured that the government was taking necessary measures to keep the situation in control.

He said it is with this in mind that the government has instituted measurers to reduce on recurrent expenditure through measures like cutting on domestic and international travel, conferences and workshops, training and purchase of furniture.

Mr Kenyatta however clarified that no individuals would lose their jobs in the civil service as a result of the new measures, only that there would be no recruitment of staff other than in the core security ministry.

“We are doing our best and it will come out in the Supplementary Budget, to ensure that on-going projects especially infrastructure related projects that can create employment shall be the last to be cut,” he said.

The Minister further allayed fears that the government was broke and assured that the proposed measures to cut expenditure were to ensure sustainable running of the government.

“I find it unfortunate when we issue statements that the government is broke. That has very far reaching implications to our ability to restore confidence and growth in this country especially when it’s not true,” he said, adding that such statements would heighten panic among investors.

Mr Kenyatta further reassured that the government was in control of the public debt which currently stands at Sh960 billion.

“Our debt sustainability analysis ratings by Standard and Poors and Fitch have indicated the Kenya debt position is sustainable and stable, and that’s why we have not been classified as a ‘highly indebted poor country’,” he said.

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